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Deal Nears on Merging Vaio, Fujitsu, Toshiba PC Units

The three vendors reportedly could announce an agreement next month that would create a larger PC entity in Japan.

Japanese PC makers Vaio, Toshiba and Fujitsu reportedly are a month away from merging their computer businesses and creating a larger entity that they hope will be better suited to compete in a market that is contracting worldwide and is dominated by the likes of Lenovo, HP Inc. and Dell.

Reports of a possible merger first surfaced in December 2015, though none of the principles involved would comment on the possibility. At the time, the three PC vendors were beginning negotiations.

However, now an official with at least one of the companies is talking about the plans. Hidemi Moue, CEO of venture capitalist firm Japan Industrial Partners, told Bloomberg that Vaio expects to strike a deal with the PC businesses of Fujitsu and Toshiba by the end of March. The new company would not only create a larger organization to compete with the top-tier PC makers, but also would be able to save money by combining efforts in everything from R&D to supply chains and production.

Vaio itself spun out of Sony in 2014, and is now controlled by Japan Industrial Partners.

Further reading

"The PC market is shrinking, which means there are merits in working together to make the most of research, production volumes and marketing channels," Moue told Bloomberg. "We can do it with minimal cannibalization."

The global PC market has seen shipment and sales declines for the past several years, with increasingly popular smartphones and tablets siphoning off consumer and business user money. According to analysts with Gartner and IDC, 2015 was another difficult year for the industry. Shipments fell to 288.7 million units in 2015, down 8 percent from 2014, according to Gartner. IDC analysts said it was the first time since 2008 that shipments fell below 300 million for the year.

The market is expected to continue to decline through this year, though there is promise of growth for 2017 as new systems running Microsoft's Windows 10 operating system and powered by Intel's newest 14-nanometer "Skylake" processors begin to ramp, and as new form factors—including two-in-ones, all-in-ones and detachable PCs—grow in popularity.

Japanese PC makers have been particularly hurt during the downturn. Roger Kay, principal analyst with Endpoint Technologies Associates, told eWEEK in December that companies like Vaio, Toshiba and Fujitsu had never gained much traction beyond the country, focusing more of their efforts on a Japanese market that wasn't big enough to easily sustain them all.

"They were building products by Japanese for Japanese, and the market is not big enough for all of them," Kay said. "The Japanese never really got international."

They were further hindered by the decision in 2011 by Japanese vendor NEC to create a joint venture with Lenovo of China to sell PCs in Japan. That company is now the top PC vendor in the country.

Moue told Bloomberg that a new merged company would focus initially on making PCs for the Japanese market, but added that it could try to expand internationally with other hardware systems. He pointed to Vaio's recent launch of a smartphone running Microsoft's Windows 10 operating system and plans for a robot companion system.

A spokesperson for Toshiba said that "in the PC business, all options are on the table for restructuring and partnerships, but nothing has been decided at this moment." A Fujitsu spokesperson declined to comment.

For Toshiba, being able to spin out its PC business into the new joint venture would also help as it works to pay for an accounting scandal that has shaken the company. Toshiba officials on Feb. 16 said there were no plans for withdrawing from PC production and selling a factory in China, contradicting a report in a Japanese newspaper, according to Reuters.

A merged PC company also would come after Fujitsu officials in December 2015 announced they were spinning out the vendor's struggling PC and smartphone businesses. The new companies—Fujitsu Client Computing (for PCs) and Fujitsu Connected Technologies (smartphones)—were scheduled to begin operation this month.

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